Overall, Budget 2002-2003 seems to have brought some scowls and some smiles to cable and satellite television industry professionals' faces.

Peter Mukerjea, CEO, Star India
"There was not too much expected from the Budget this year, as was indicated by the economic survey (released by the government on 26 February)."

"It is a growth-oriented mid-term & long-term Budget with specific emphasis on infrastructural sectors like roads, airports, ports etc. The relaxation of FII investments in most sectors will help to mobilise more funding for investment purposes.

"The Finance Minister, in his speech, about the importance of the Entertainment sector and making India the international hub for all types of Entertainment inputs is very encouraging. However, his decision to extend service tax to cable operators (earlier exempt ) instead of deferring the service tax as requested is a set back to the industry.

"It is good sign for reduction of Corporate tax for foreign companies from 48 per cent to 40 per cent. Abolishing of dividend distribution tax and reintroduction of tax, in the hands of the recipient, is going to impact the investors and also the mutual fund industry.

"His move to rationalise the Customs and Excise duties on equipment which is not indigenously available is welcome."

Kunal Dasgupta, CEO, Sony Entertainment Television
"I have no complaints about this budget. And in fact the 5 per cent service tax on cable operators may in fact have a positive fallout. This is because it will probably be passed on to consumers. If the government keeps strict tabs on this it may even increase declarations which is what broadcasters have been demanding all along."

Ashok Mansukhani, executive V-P, corporate services, HTMT (the Hinduja Group's information technology, media and telecommunications umbrella company)
"There is no specific benefit for the cable industry in this budget. The imposition of the service tax will only add to the financial burden we are under. Especially considering the fact that we have to pay entertainment tax to the state governments, in addition to the unreasonable hikes in subscription rates that broadcasters are resorting to."

CNBC India CEO Haresh Chawla opines that the entertainment industry's expectations had built up quite a bit around this year's budget. Yashwant Sinha's offering, consequently, did not come up to scratch.

"The industry was looking at measures that would have brought it on par with the telecom and IT sectors in the country," says Chawla.

The service tax on the caps on FII are other issues that will add to the industry's burden, he feels. While the budget has been kinder to the telecom industry, media as an industry has not benefited from this year's budget, he says. Regarding the issue of corporate tax burden on foreign companies being reduced from 48 to 40 per cent, Chawla says that despite the sops, other surcharges on foreign companies will not allow much benefit to percolate. "The industry was expecting a growth impetus, but that has not come through," he says.

Sandeep Goyal, Group Broadcasting CEO, Zee Telefilms
* Cap on FII investment in company has been abolished.
"A positive step towards attracting foreign investments."

* FII portfolio investments not to be subject to the sectoral limits for FDI except in specified sectors.
"It will clarify confusions prevailing in case of investments made by Indian companies in important sectors of the economy."

"Zee would greatly benefit because of this clarification provided in the Budget. Zee's proposal to set up its own uplinking hub could not be cleared because the FDI restrictions were taken after adding FII investment in the company."

* Automatic approval for overseas investment up to $100 mn. on an annual basis from earlier $50 million.
"Positive step in encouraging Indian Industry to take benefit of globalisation and face stiff competition."

* Indian companies may make overseas investment in joint ventures abroad by market purchases without prior approval up to 50 per cent of their network.
"As above."

* Special Budget of Rs 415 crore (Rs 4150 million) for Ministry of I&B.
"Will provide encouragement to entertainment and media industry in general."

INDIRECT TAXES:
* Service Tax of 5% levied on Cable Operators and event management companies.
"Will add to the cost of entertainment reaching viewers. However, this would lead to introduction of certain rules and regulations in the otherwise not so well controlled cable operators. Since cable operators would also be forced by the Government to declare the actual number of households, the declared connectivity to the broadcasters would automatically improve. Thus improvement in the subscription revenue would increase substantially."

* Special Excise Duty of 16 per cent abolished on a number of items. "Input cost in the industry will come down proportionally."

* Peak rate of Customs Duty reduced from 35 per cent to 20 per cent on earth station equipment and related equipment.
"Positive step in encouraging infrastructure investment in media industry in India."

DIRECT TAXES:
* Additional Surcharge of 5% levied on Income Tax of Personal and Corporates.
"Additional burden on tax payers. Companies would be adversely affected."

* Income Tax Rates on Foreign Companies reduced to 40 per cent from 48 per cent.
"Will directly benefit the company (ZTL). Since its main broadcasting Company viz. Asia Today Limited is a foreign company located in Mauritius."

* 50 per cent of profits of multiplexes set up in non-metro cities have been exempted from tax for five years.
"Will encourage infrastructure investment in entertainment and media industry. With these kind infrastructural facilities being available the entertainment and information content production companies would get additional avenues to reach viewers and maximise the exploitation of content."

* Dividend Tax of 10 per cent levied on companies have been exempted and it will be taxes in the hands of individuals. TDS of 10% to be deducted from dividend payments.
"Companies will save in terms of outflow on account of payment of dividend tax."

"Since it is to be taxed in the hands of tax payers, the capital investments will be discouraged."

* Carry Forward losses in case of merger of telecom companies allowed. "Entertainment and Media industry representations on the subject have not been accepted on this subject. Should have been allowed such deductions in case of merger of service sector companies including entertainment and media."

* In case of shipping companies, minimum Alternate Tax has been abolished.
"Should have also been abolished in case of service sector companies including entertainment and media."

Advantage foreign broadcaster in Budget 2002

Details of Yashwant Sinha's budget speech